Why UK-Based MNCs Moved Their Call Centers to India

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  • Published : March 13, 2013
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“Why did so many UK companies transfer their call-centres to India? Assess the problems they encountered.”
Abstract
Over the past decade, it has seemed like a wise strategic decision for many multi-national corporations (MNCs) to relocate their customer service centres or “call centres” to LEDCs such as India, with the view of cheaper labour and relaxed employment laws potentially being some of the incentives for such a decision. This essay will explore these reasons in great detail and also suggest explanations as to why a number of said companies ha ve recently returned to the UK after experiencing a number of problems. This work will conclude to recap on findings and offer alternatives that MNCs may wish to investigate further.

The Benefits of Offshoring
“Each call is being monitored, each call is being recorded. And they randomly pick up any call and then monitor the call, see the work you're doing.” (Mirchandani, 2003) Control. A single word that I will argue as being the main reason for the offshoring of thousands of UK based multi-national jobs to India. Whether it is the constant monitoring of agents work, as shown in the words of one Indian worker presented above, or whether it is the control of costs and customer service that UK managers worry about on a day to day basis, control has a vital part to play in any decision to set up operations in cities such as Mumbai or Delhi.

Due to their financial power and size, a number of MNCs have been able to exploit opportunities that have emerged as a result of a recently liberalised India. Due to “large and growing fiscal imbalances over the 1980s” (Bajpai, 1996) coupled with “political turmoil, high oil prices and fiscal profligacy” (The Economist, 2011), India suffered a serious financial crisis in 1991 (similar to the recession experienced in the UK recently) and the Indian government was forced to re-think and indeed radicalise policy in order to survive. In July of that year Manmohan Singh, the countries Minister of Finance delivered a budget that did just that. In his words, the changes presented “represent the beginning of a transition from a regime of quantitative restrictions to a price based mechanism” (Singh, 1991) and moved India from a country well known for its numerous complex laws and taxes keeping foreign direct investment at bay, to a country open and wi lling to do business with international firms based in western countries such as the UK and USA.

Once such barriers were removed, a number of UK MNCs seized the opportunity and quickly got to work on offshoring. But why India? Why not one of the other d eveloping countries with similar start-up costs and trading laws, such as the Philippine’s? Aswathappa (2005:7) suggests that as a result of the countries liberalisation, the creation of an infrastructure needed to operate call centre environments (one that did not exist in the country previously) is relatively straight forward and has even helped along by the Indian James Hutchinson | 21442797 | Page 1 of 8

government. Companies such as P&G, Whirlpool and Coca Cola have all been given access to free or reduced cost raw materials and fast turnar ound times on paperwork, as a result of the Indian governments new found love of international business. For example, automotive manufacturers Volvo were granted 120 acres of land and Pollution Control Board clearance in just 3 months, a result that would have previously taken a number of years. A number of other commentators suggest that UK companies choosing India is also partly due to the attitude of the countries workforce. Whilst India lacks any history with customer service, due to demand constantly exceeding supply, Indian workers hold qualities that are not so easily found in the UK. Indian workers are often seen as reliable and less likely to leave such a job due to the lack of alternatives of the same standard. For example, from day one workers are classed as “Call Centre Executives” and...
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